12 Dec Renting and Renting out an Apartment in Italy Without Surprises
All you need to know before renting (and renting out) a property in Italy
By Avv. Michele Capecchi, LL.M.
The Internet is an amazing resource for all those wanting to rent an apartment without the assistance of a real estate agency. However, while the adventure of finding the perfect place for a short- or long-term stay can be rather exciting, the technicalities of both renting and renting out an apartment, especially in a foreign country, present numerous obstacles, not the least of which is a stream of seemingly unintelligible paperwork and legal stumbling blocks. Whether you are a student, tourist or owner planning to rent out a property, it is important to understand the basic elements of short-term residential agreements.
Types of contracts
Under Italian law, residential leases differ according to duration and purpose. Short-term leases are usually either per uso turistico (for tourism purposes) or contratto transitorio (for temporary purposes).
The contratto per uso turistico allows use of the apartment for a few days, weeks or months, at which point the owners regain possession of their property. In this case, the ‘holiday purpose’ of the lease must be stated clearly in the contract, and the tenant must promise not to take up residency in the apartment. Although Italian law does not specify a maximum duration for this type of lease, it is inadvisable to make tourist contracts more than 8–10 months. Neither an automatic renewal nor extension clause should be included.
The contratto per uso transitorio must clearly state why the tenant has to rent (or the owner rent out) for a limited time only. For example, if the short term reflects the tenant’s need, attending a university course or program, the lease must include evidence, such as a copy of university enrolment, as an annex. The contract must state the duration of the lease, generally between 1 and 18 months. It may be renewed but not extended. For students attending a university program, the lease can run from 6 to 36 months. At the end of the lease, the tenant does not have to give the landlord notice, but if the landlord is asking the tenant to vacate the apartment, he or she must do so in writing, in advance.
You found the apartment. Now what? Here are six recommendations:
- Get it in writing
Be wary of people who say ‘I trust you. We don’t need you to sign an agreement just for a few weeks.’ Any type of rental agreement, even ones for a few days, should be in written form, signed by both parties, and include all information about the owner and tenant; the apartment; the price; whether or not utilities or maintenance expenses are included (and up to what amount); the start and end date of the lease; the amount of security deposit; and the conditions for the restitution of the deposit. As of March 2014, cash payments of up to 1,000 euro per month are allowed, and tenants must receive a receipt each time they pay for something.
- Include an early-termination clause
Even though it is not mandatory, I recommend that the contract includes the terms and conditions that allow one of parties (especially the tenant) to terminate the agreement before its natural end. Early termination usually requires notification by a lettera raccomandata (a registered letter) delivered in advance of the time stipulated in the contract. Note that e-mails or telephone calls could be challenged as invalid ways to communicate early termination.
- Spell out the details of the security deposit and payment of utilities
I highly recommend that the tenant and the owner clarify in the contract how the bills for the last month of lease should be calculated and paid, and whether or not the deposit can be used for unpaid rent or bills. At the end of the lease, normal wear and tear cannot be charged to the tenant, but it is tricky to determine whether the almost-new kitchen cabinet was deteriorated by normal use or by the tenant’s careless behaviour. Both parties should therefore pay particular attention to both the moving-in and moving-out process: owner and tenant should carefully check the apartment together at the beginning of the lease, going through or making a checklist list and signing it. Upon the move-out inspection, the deposit should be returned immediately if no damage is reported. Note that if it is not possible to calculate the utilities owed when the tenant moves out (and if the utilities are not clearly included in the rent), the deposit is often (questionably) kept by the landlord to pay the incoming bills; any overpayment should be promptly wired back to the tenant.
- File the paperwork
Within 48 hours of the tenant’s arrival, the landlord must complete a comunicazione cessione fabbricato, the declaration of hospitality form, and file it with the local police station, providing the names and copies of the IDs of every person staying in the property. The landlord is responsible for registering a copy of the rental contract within 30 days of its signature at the Agenzia delle Entrate (tax revenue office). A copy of the registered contract (with stamps and seals) must be given to the tenant. The registration costs are normally split between the parties. If the landlord fails to register the contract (thus, not paying taxes owed), he or she may be subject to extremely steep fines. If the landlord does not register the lease as required, the tenant can do so.
- Understand the consequences
Failure to meet any legal requirements of these short-term leases may expose the landlord (and sometimes also the tenant) to unpleasant consequences. The contract could be challenged as being unlawful if ‘tourist purposes’ were merely simulated and the lease could be automatically transformed into a regular free-market rental agreement, in which case, the landlord would be bound by a long-term agreement. (Learn more at theflr.net/renting)
- Do not rely on online lease templates
While these are useful for identifying some of the terms and conditions that the contract should include, it is not advisable to base an important agreement that will be binding for months (or even years) on a template. Professional advice is essential.
So, what if I’m renting (or want to rent out) for a longer period of time?
Basically, when tenants and house owners are willing to set up a long-term rapport (renting the apartment without a specific time limit, or for more than three or four years), the law offers them two types of contracts: the Contratto 4+4 (or free market agreement), which means a contract that lasts four years with the option, for the tenant, to extend it for another four years, and the contratto a tariffa concordata (contract with agreed tariff), which is a three + two-year contract.
Generally speaking, short-term leases are only allowed in very specific cases, while law number 431/1998 fosters longer, more binding agreements as a way to protect the rights of the tenants and avoid any unfair conditions unilaterally imposed by the stronger party (especially in terms of minimum duration of the lease, reasons to cancel the contract before the agreed terms, cost of the rent, deposits etc.).
If the landlord doesn’t want to have to deal with frequent changes of tenants, the law offers him/her the possibility to choose between a contract that lasts for a long time (four + another four years), but gives the landlord the freedom to decide the price of the rent without restriction, or a type of contract that binds the landlord for a shorter time (three + two years) but sets a maximum rent.
Contratto di locazione a canone libero (free market agreement)
By law, this is the contract that should be used for the majority of private house rental agreements. In this case, the landlord can set the price he wants for the rent (canone libero means ‘free rental price’). In exchange for this freedom in setting the price of the rent, the contract must last for at least four years, after which the tenant has the option to renew the contract for another four years or to leave the apartment. Hence the name ‘4+4 contract’. In actual fact, it is only the landlord who is bound to the same tenant for a minimum of four years and a maximum of eight years. The tenant, as we will see, has much more flexibility.
Contratto di locazione a tariffa concordata o agevolata (contract with an agreed or ‘discounted’ rate)
In this case, the landlord is bound for three years only, with the option for the tenant to stay for another two years (so a maximum of five years). Because of this shorter commitment by the landlord, the law enforces the landlord to set a (cheaper) price, which must observe pre-approved tariffs established by the tenants’ and landlords’ associations and the local town authorities. The rent is calculated according to precise parameters, such as location, size and quality of the apartment. For this type of contract, the government may provide special tax breaks and other discounts to the landlord(as a ‘reward’ for choosing this type of agreement),and the contract duration may be significantly shorter (three years plus two more years), unless the parties agree to make it last longer. Also in this case, the landlord may terminate the contract at the end of the first three years solely for specific reasons established by the law. This intention must be communicated with six months’ notice (by registered mail). Otherwise the contract is automatically extended for another two years.
Early termination of the agreement
The tenant’s options
Under these two types of long-term agreements, the tenant may terminate the agreement at any time (but only if the contract explicitly offers this option), even before the four (or three) years expire, by sending six months’ notice to the landlord by registered mail (lettera raccomandata). If the contract does not expressly provide this option, the tenant can still, by law, terminate the contract early (again, by giving six months’ notice) if there are gravi motivi, serious (and proven) reasons. Finally, if no serious reasons occur, at the end of the first term, the tenant may decide not to renew the agreement. He or she is not required to provide a specific reason, but the intention to terminate the contract must still be stated with six months’ notice by registered mail.
The landlord’s options
In these long-term contracts, the landlord may not evict the tenant when he or she wants to. If the tenant pays the rent regularly and observes the terms of the agreement, he cannot be evicted before the end of the first four years. At the end of the first four years, the landlord may send a formal written request to have the apartment back and communicate the termination of the contract only if there are legal reasons to do so (see art. 3 law 431/1998 and art. 29 law 27/07/1978 no. 392). If these conditions are not observed, the early termination requested by the landlord is illegitimate (art 3, comma 3, law 431/1998) and the tenant may challenge that eviction notice before a court. In very specific cases the tenant may even ask for damages.
Originally published by Michele Capecchi on The Florentine (http://www.theflorentine.net/lifestyle/2014/04/home-sweet-home/).